Does Studying Economics Inhibit Cooperation?

by Robert H. Frank, Thomas Gilovich, and Dennis T. Regan

In an essay written in 1879, Francis Amasa Walker tried to explain
“why economists tend to be in bad odor amongst real
people.” Walker, who went on to become the first president of
the American Economic Association, argued that it was partly because
economists disregard “…the customs and beliefs that tie
individuals to their occupations and locations and lead them to act in
ways contrary to the predictions of economic theory.”

More than a century later, the general public continues to regard
economists with suspicion. This attitude stems in part from an
apparent misunderstanding of economists' positions on important public
policy issues. For example, economists commonly advocate auctioning
rights to discharge atmospheric pollutants to the highest bidders,
leading critics to bemoan economists' “shocking disregard for
the environment and lack of compassion for the poor.” What else,
the critics ask, could enable them to support a program under which
“the rich can pollute to their heart's content?” On closer
examination, however, the economist's position is less hostile to the
interests of the poor and the environment than it appears. Indeed, as
almost every economics student now knows, the effect of auctioning
pollution rights is to concentrate the burden of pollution reduction
in the hands not of the poor but of those people and firms who can
reduce pollution at the lowest cost. And this is an outcome that is
clearly in the interests of all citizens, rich and poor alike.

Misunderstandings of this sort aside, there remains another
important source of public skepticism toward economics — namely,
the perception that economics encourages people to act selfishly in
pursuit of their own material interests. In this paper, we examine
the validity of this perception.

Economists and the Self-Interest Model

If pressed, most economists will concede that people sometimes care
about more than just their own material well being. Many have
concerns for the welfare of other people, for esthetics, for their
duties as citizens, and so on.

Yet few economists include these broader concerns in their models
of human behavior. It may well be that the unpaid volunteer who heads
the local United Way Campaign is driven purely by his concern for the
disadvantaged; but economists feel on much firmer ground if they can
identify some more narrowly self-interested motive for his action.
And on inspection, there is at least some evidence in support of their
cynicism. When we examine the membership rolls of volunteer
organizations, we find that insurance brokers, real estate agents, car
dealers, chiropractors, and others with something to sell tend to be
disproportionately represented. Such organizations have less than
their share of truck drivers and postal employees.

The self-interest model has well established explanatory power.
Whatever role love may play in the sustenance of marriage
relationships, we know that divorce rates are higher in states that
provide liberal welfare benefits. When energy prices rise, people are
more likely to form car pools and to insulate their houses. When the
opportunity cost of time rises, people have fewer children. And so
on. From the economist's perspective, motives other than
self-interest may matter, but they are peripheral to the main thrust
of human endeavor, and we indulge them at our peril. In Gordon
Tullock's words, “the average human being is about 95 percent
selfish in the narrow sense of the term.”

From its base in economics, the self-interest model has made strong
inroads into a variety of other disciplines. Psychologists, political
scientists, sociologists, philosophers, game theorists, biologists,
and others rely increasingly on this model to explain and predict
human behavior.

The basic question we investigate in this paper is whether exposure
to the self-interest model alters the extent to which people behave in
self-interested ways. The paper is organized into two parts. In the
first, we report the results of a series of empirical studies —
some our own, some by other investigators — that support the
hypothesis that economists behave in more self-interested ways. By
itself, this evidence does not demonstrate that exposure to the
self-interest model is the cause of more self-interested
behavior, although, as we will see, a case can be made for this
proposition on a priori grounds. An alternative interpretation is
that economists may simply have been more self-interested to begin
with, and this difference was one reason they chose to study
economics. In the second part of the paper, we present preliminary
evidence that exposure to the self-interest model does in fact
increase self-interested behavior.

I. Do Economists Behave Differently?

A. The Free-Rider Experiments

One of the clearest predictions of the self-interest model is that
people will tend to free-ride on the efforts of others when it comes
to the provision of public or collective goods. Even people who would
strongly benefit from having, say, higher program quality on public TV
have little incentive to contribute. After all, any single
individual's contribution is far too small to alter the likelihood of
achieving the desired outcome.

A study by Gerald Marwell and Ruth Ames found that students of
economics are indeed much more likely to free-ride in experiments that
called for private contributions to public goods. Their basic
experiment involved a group of subjects who were given an initial
endowment of money, which they were to allocate between two accounts,
one “public,” the other “private.” Money
deposited in a subject's private account was returned dollar for
dollar to the subject at the end of the experiment. Money deposited
in the public account was first pooled, then multiplied by some factor
greater than one, and then distributed equally among all subjects.

Under these circumstances, the socially optimal behavior is for
each subject to put her entire endowment in the public account. But
the individually most advantageous strategy is to put all of it in the
private account. The self-interest model predicts that all subjects
will follow the latter strategy. Most don't. Across eleven
replications of the experiment, the average contribution to the public
account was approximately 49 percent.

It was only in a twelfth replication with first-year graduate
students in economics as subjects that Marwell and Ames obtained
results more nearly consistent with the self-interest model. These
subjects contributed an average of only 20 percent of their initial
endowments to the public account, a figure significantly less than the
corresponding figure for noneconomists (p<.05).

On completion of each replication of the experiment, Marwell and
Ames asked their subjects two followup questions:

What is a “fair” investment in the public good?

Are you concerned about “fairness” in making your
investment decision?

In response to the first question, 75 percent of the noneconomists
answered “half or more” of the endowment, and 25 percent
answered “all.” In response to question 2, almost all
noneconomists answered “yes.” The corresponding responses
of the economics graduate students were much more difficult to
summarize. As Marwell and Ames wrote,

… More than one-third of the economists either refused to
answer the question regarding what is fair, or gave very complex,
uncodable responses. It seems that the meaning of
‘fairness’ in this context was somewhat alien for this
group. Those who did respond were much more likely to say that little
or no contribution was ‘fair.’ In addition, the economics
graduate students were about half as likely as other subjects to
indicate that they were ‘concerned with fairness’ in
making their decisions.

The Marwell and Ames study can be criticized on the grounds that
their noneconomist control groups consisted of high school students
and college undergraduates, who differ in a variety of ways from
first-year graduate students in any discipline. Perhaps the most
obvious difference is age. As we will see, however, criticism based
on the age difference is blunted by our own evidence that older
students generally give greater weight to social concerns like the
ones that arise in free-rider experiments. It remains possible,
however, that more mature students might have had a more sophisticated
understanding of the nuances and ambiguities inherent in concepts like
fairness, and for that reason gave less easily coded responses to the
followup questions.

Yet another concern with the Marwell and Ames experiments is not
easily dismissed. Although the authors do not report the sex
composition of their group of economics graduate students, such groups
are almost always preponderantly male. The authors' control groups of
high school and undergraduate students, by contrast, consisted equally
of males and females. As our own evidence will later show, there is a
sharp tendency for males to behave less cooperatively in experiments
of this sort. So while the Marwell and Ames findings are suggestive,
they do not clearly establish that economists behave differently.

B. Economists and the Ultimatum Bargaining Game

The other major study of whether economists behave differently from
members of other disciplines is by John Carter and Michael Irons
(1991). These authors measured the self-interestedness of economists
by examining their behavior in the ultimatum bargaining game. This is
a simple game with two players, an “allocator” and a
“receiver.” The allocator is given a sum of money (in
these experiments, $10), and must then propose how to divide this sum
between herself and the receiver. Suppose, for example, the allocator
proposes $X for herself, the remaining $(10-X) for the receiver. Once
the allocator makes this proposal, the receiver has two choices: (1)
he may accept, in which case each player gets the amount proposed by
the allocator; or (2) he may refuse, in which case each player gets
zero. The game is played only once by the same partners.

If both players behave according to the self-interest model, the
model makes an unequivocal prediction about how the game will proceed.
Assuming the money cannot be divided into units smaller than one cent,
the allocator will propose $9.99 for herself and the remaining $0.01
for the receiver, and the receiver will accept on the grounds that a
penny is better than nothing. Since the game will not be repeated,
there is no point in the receiver turning down a low offer in the hope
of generating a better offer in the future.

Other researchers have shown that the strategy predicted by the
self-interest model is almost never followed in practice: 50-50 splits
are the most common outcome, and most one-sided offers are rejected
out of concerns about fairness.

The research strategy employed by Carter and Irons was to compare
the performance of economics majors and other students and see which
group came closer to the predictions of the self-interest model. In a
sample of 43 economics majors, the average minimum amount acceptable
by the receiver was $1.70, as compared with an average of $2.44 for a
sample of 49 noneconomics majors (p<.05). As receivers then,
economics majors came significantly closer than nonmajors to the
behavior predicted by the self-interest model.

In the allocator's role as well, economics majors performed more in
accordance with the predictions of the self-interest model than did
nonmajors. Economics proposed to keep an average of $6.15 for
themselves, as compared to an average of only $5.44 for the sample of
49 nonmajors (p<.01).

Kahneman, Knetsch, and Thaler (1986) report findings similar to
those of Carter and Irons: commerce students (the term used to
describe business students in Canadian universities) were more likely
than psychology students to make one-sided offers in ultimatum
bargaining games.

One difficulty with the Carter and Irons results is that the way
they assigned the allocator and receiver roles leaves open possible
differences in the interpretation of what behavior is required in the
name of fairness. In particular, allocators earned their role by
having achieved higher scores on a preliminary word game. Allocators
might thus reason that they were entitled to a greater share of the
surplus on the strength of their earlier performance. The observed
differences in the behavior of economics majors and nonmajors might
therefore be ascribed to a differential tendency to attach
significance to the earlier performance differences. The training
received by economics students in the marginal productivity theory of
wages lends at least surface plausibility to this interpretation.

To summarize the existing literature, both the Marwell and Ames and
Carter and Irons papers provide evidence consistent with the
hypothesis that economists tend to behave less cooperatively than
noneconomists. But because of the specific experimental design
problems mentioned, neither study is conclusive. In the following
sections we describe our own attempts to test the hypothesis that
economists behave less cooperatively.

C. Survey Data on Charitable Giving

The central role of the free-rider hypothesis in modern economic
theory suggests that economists might be less likely than others to
make gifts to private charities. To explore this possibility, we
mailed questionnaires to 1245 college professors randomly chosen from
the professional directories of 23 disciplines, asking them to report
the annual dollar amounts they gave to a variety of private charities.
We received 576 responses with sufficient detail for inclusion in our
study. Respondents were grouped into the following disciplines:
economics (N 75); other social sciences (N 106); math, computer
science, and engineering (N 48); natural sciences (N 98); humanities
(N 94); architecture, art, and music (N 68); and professional (N 87).
Members of every discipline, even economics, fell far short of the
prediction of the strong version of the free-rider hypothesis. But
the proportion of pure free riders among economists (that is, those
who reported giving no money to any charity) was more than double that
of any of the other six areas included in the survey. (See Figure
1.)

Figure 1. Proportion of Pure Free Riders in Seven Disciplines.

Although we do not have data on the gender of each survey
respondent, gender differences by discipline do not appear to account
for the pattern of free-ridership shown in Figure 1. For example, the
natural sciences, which are also preponderantly male, had only
one-third as many free riders as did economics.

Despite their generally higher incomes, economists were also among
the least generous in terms of their median gifts to large charities
like viewer-supported television and the United Way, which are shown
in Figures 2 and 3, respectively.

Figure 2. Median Gift to Public Television.

Figure 3. Median Gift to the United Way.

In fairness to the self-interest model, we should note that there
may be self-interested reasons for contributing even in the case of
charities like the United Way and public television. United Way
campaigns, for example, are usually organized in the workplace and
there is often considerable social pressure to contribute. Public
television fund drives often make on-the-air announcements of donors'
names and economists stand to benefit just as much as the members of
any other discipline from being hailed as community-minded citizens.
In the case of smaller, more personal charitable organizations, there
are often even more compelling self-interested reasons for giving.
After all, failure to contribute in accordance with one's financial
ability may mean outright exclusion from the substantial private
benefits associated with membership in religious groups, fraternal
organizations, and the like.

An examination of economists' gifts to other charities revealed
that their median annual gift is actually slightly larger, in absolute
terms, than the median for all disciplines taken as a whole. But
because economists have significantly higher salaries than do the
members of most other disciplines, these data, like the data shown in
Figures 2 and 3, tend to overstate the relative generosity of
economists. Unfortunately, we do not have direct income measures for
the respondents in our survey, but we do have the number of years each
respondent has been a practitioner in his or her discipline. In an
attempt to take income effects into account, we estimated earnings
functions (salary vs. years of experience) for each discipline using
data from a large private university. We then applied the estimated
coefficients from these earnings functions to the experience data from
our survey to impute an income estimate for each respondent in our
survey. Finally, we used these imputed income figures, together with
our respondents' reports of their total charitable giving to estimate
the relationship between income and total giving shown in Figure 4.
In the latter exercise, all economists were dropped from the sample on
the grounds that our object was to see whether the giving pattern of
economists deviates from the pattern we see for other disciplines.

Thus, for example, in Figure 4 we see that a noneconomist with an
annual income of $44,000 (roughly, the median imputed income for
architects in our sample) is expected to give almost $900 per year to
charity, while a noneconomist with an income of $62,000 (roughly the
median imputed income for economists in our sample) is expected to
give more than $1400 per year.

Figure 4. Charitable Giving vs. Imputed Income.

Using the relationship between charitable giving and income, we
calculated the expected gift for each respondent as a function of his
or her imputed income. We then calculated our measure of a
discipline's generosity as the ratio of the average value of gifts
actually reported by members of the discipline to the average value of
gifts expected on the basis of the members' imputed incomes. A
discipline is thus more generous than expected if this ratio exceeds
1.0, and less generous if it is less than 1.0. The computed ratio for
economists was 0.91, which means that economists in our sample gave 91
percent as much as they would have been expected to give on the basis
of their imputed incomes. The performance of economists by this
measure is compared with the performance of other disciplines in
Figure 5.

Figure 5. The Ratio of Average Gift to Gift Expected on the
Basis of Income.

On a number of other dimensions covered in our survey, the behavior
of economists was little different from the behavior of members of
other disciplines. For example, economists were only marginally less
likely than members of other disciplines to report that they would
take costly administrative action to prosecute a student suspected of
cheating. Economists were actually slightly above average for the
entire sample in terms of the numbers of hours they reportedly spend
in “volunteer activities.” In terms of their reported
frequency of voting in presidential elections, economists were only
slightly below the sample average.

D. Economists and the Prisoner's Dilemma

In this section we report our results from a large experimental
study of how economics majors and nonmajors perform in the prisoner's
dilemma game.

Table 1 shows the monetary payoffs in dollars to two players, X and
Y, in a standard prisoner's dilemma. In Table 1, as in all prisoner's
dilemmas, each player gets a higher payoff when each cooperates than
when each defects. But when one player's strategy is fixed, the other
player always gets a higher payoff by defecting than by cooperating;
and hence the dilemma. By following individual self-interest, each
player does worse than if each had cooperated.

Table 1. Monetary Payoffs for a Prisoner's Dilemma Game.

One of the most celebrated and controversial predictions of the
self-interest model is that people will always defect in one-shot
prisoner's dilemmas. The game thus provides an opportunity to examine
the extent to which various groups exhibit self-interested behavior.
Accordingly, we conducted a large one-shot prisoner's dilemma
experiment involving both economics majors and nonmajors. Many of our
subjects were students recruited from courses in which the prisoner's
dilemma is an item on the syllabus. Others were given a detailed
briefing about the game.

Our subjects met in groups of three and each was told that he would
play the game once with each of the other two subjects. The payoff
matrix, shown in Table 1, was the same for each play of the game.
Subjects were told that the games would be played for real money, and
that none of the players would learn how their partners had responded
in each play of the game. (More below on how confidentiality was
maintained.)

Following a period in which subjects were given an opportunity to
get to know one another, each subject was taken to a separate room and
asked to fill out a form indicating his response (cooperate or defect)
to each of the other two players in his group. After the subjects had
filled out their forms, the results were tallied and the payments
disbursed. Each subject received a single payment that was the sum of
three separate amounts: (1) the payoff from the game with the first
partner; (2) the payoff from the game with the second partner; and (3)
a term that was drawn at random from a large list of positive and
negative values. None of these three elements could be observed
separately, only their sum.

The purpose of the random term was to make it impossible for a
subject to infer from her total payment how any of the other subjects
had played. It prevented both the possibility of inferring individual
choices and also of inferring even group patterns of choice. Thus,
unlike earlier prisoner's dilemma experiments, ours did not enable the
subject to infer what happened even when each (or neither) of her
partners defected.

In one version of the experiment (the “unlimited”
version), subjects were told that they could make promises not to
defect, but they were also told that the anonymity of their responses
would render such promises unenforceable. In two other versions of
the experiment (the “intermediate” and
“limited” versions), subjects were not permitted to make
promises about their strategies. The latter two versions differed
from one another in terms of the length of pre-game interaction, with
up to 30 minutes permitted for the intermediate groups and no more
than ten minutes for the limited groups. All groups were given an
extensive briefing on the prisoner's dilemma at the start of the
experiment and each subject was required to complete a questionnaire
at the end to verify that he or she had indeed understood the
consequences of different combinations of choices.

Results for the Sample as a Whole

For the sample as a whole there were a total of 267 games, which
means a total of 534 choices between cooperation and defection. The
choices for economics majors and nonmajors are shown in Figure 6,
where we see that the defection rate for economics majors was 60.4
percent, as compared to only 38.8 percent for nonmajors.

Figure 6. Defection and Cooperation Rates for the Sample as a
Whole.

Needless to say, this pattern of differences is strongly supportive
of the hypothesis that economics majors are more likely than nonmajors
to behave self-interestedly (p<.005).

Adding Control Variables

Earlier we noted that one possible explanation for the observed
differences between economics students and others is that economics
students are more likely than others to be male. To control for the
possible influences of sex, age, and experimental condition, we
performed the ordinary least squares regression reported in Table 2.
Because each subject played the game twice, the individual responses
are not statistically independent. To get around this problem, we
limited our sample to the 207 subjects who either cooperated with, or
defected on, each of their two partners. The 60 subjects who
cooperated with one partner and defected on the other were deleted
from the sample. The dependent variable is the subject's choice of
strategy, coded as 0 for “cooperate” and 1 for
“defect.” The independent variables are “econ”
which takes the value 1 for economics majors, 0 for all others;
“unlimited,” which is 1 for subjects in the unlimited
version of the experiment, 0 for all others;
“intermediate,” which is 1 for subjects in the
intermediate version, 0 for all others; “limited,” which
is the reference category; “sex,” coded as 1 for males, 0
for females; and “class,” coded as 1 for freshmen, 2 for
sophomores, 3 for juniors, and 4 for seniors.

Dependent variable:own response

R2 22.2% R2(adjusted) 20.3%

s 0.4402 with 207 - 6 201 degrees of freedom

SourceSum of SquaresdfMean SquareF-ratio

Regression11.142652.22911.5

Residual38.95402010.193801

VariableCoefficients.e.t-ratio

Constant0.5791270.10415.57

econ0.1688350.07802.16

unlimited0.00----

intermediate-0.0911890.0806-1.13

limited-0.3295720.0728-4.53

sex0.2399440.06423.74

class-0.0653630.0303-2.16

Table 2. Whole Sample Regression.

Consistent with a variety of other findings on sex differences in
cooperation, we estimate that, other factors the same, the probability
of a male defecting is almost 0.24 higher than the corresponding
probability for a female. Even after controlling for the influence of
gender, we see that the probability of an economics major defecting is
almost 0.17 higher than the corresponding probability for a
nonmajor.

The coefficients for the unlimited and intermediate experimental
categories represent effects relative to the defection rate for the
limited category. As expected, the defection rate is smaller in the
intermediate category (where subjects have more time to interact than
in the limited category), and falls sharply further in the unlimited
category (where subjects are permitted to make promises to cooperate).
With subjects' permission, we tape recorded the conversations of
several of the unlimited groups, and invariably each person promised
each of his partners he would cooperate. (There would be little
point, after all, in promising to defect.)

Note, finally, that the overall defection rate declines
significantly as students progress through school. The class
coefficient is interpreted to mean that with the passage of each year
the probability of defection declines, on the average, by almost 0.07.
This pattern will prove important when we take up the question of
whether training in economics is the cause of higher defection rates
for economics majors.

The Unlimited Subsample

Focusing on subjects in the unlimited subsample, we see in Figure 7
that the difference between economics majors and nonmajors virtually
disappears once subjects are permitted to make promises to cooperate.
For this subsample, the defection rate for economics majors is 28.6
percent, for nonmajors 25.9 percent.

Figure 7. The Unlimited Subsample (Promises Permitted).

The Intermediate and Limited Subsamples

Because the higher defection rates for economics majors are largely
attributable to the no-promises conditions of the experiment, the
remainder of our analysis focuses on subjects in the limited and
intermediate groups. The conditions encountered by these groups are
of special significance because they come closest to approximating the
conditions that characterize social dilemmas encountered in practice.
After all, people rarely have an opportunity to look one another in
the eye and promise not to litter on deserted beaches or disconnect
the smog control devices on their cars.

In Figure 8 we report the choices for the pooled limited and
intermediate groups. Comparing the entries in Figure 8 with Figure 7,
we see clear evidence of the higher defection rates of both economics
majors and nonmajors. The defection rates of 71.8 percent and 47.3
percent for economics majors and nonmajors, respectively, differ
significantly from one another at the .01 level.

Figure 8. Defection and Cooperation Rates for the No-Promises
Subsample.

Reasons for Cooperation and Defection

As part of the exit questionnaire that tested our subjects'
understanding of the payoffs associated with different combinations of
choices, we also asked them to state their reasons for making the
choices they did. We hypothesized that economists would be more
inclined to construe the objective of the game in self-interested
terms, and therefore more likely to refer exclusively to features of
the game itself when describing reasons for their choices. By
contrast, we expected the noneconomists to be more open to alternative
ways of interpreting the game, and thus more likely to look to their
partners for cues about how to play. Accordingly, we expected
noneconomists to refer more often to their feelings about their
partners, aspects of human nature, and so on. This is precisely the
pattern we found. Among the sample of economics students, 31% made
exclusive reference to features of the game itself in explaining their
chosen strategies, as compared with only 17% of the noneconomists.
The probability of obtaining such divergent responses by chance is
less than .05.

Another possible explanation for the economists' higher defection
rates is that economists may be more likely than others to expect
their partners to defect. The self-interest model, after all,
encourages such an expectation, and we know from other experiments
that most subjects defect if they are told that their partners are
going to defect. To investigate the role of expectations, we asked
students in an upper division public finance course in Cornell's
economics department whether they would cooperate or defect in a
one-shot prisoner's dilemma if they knew with certainty that
their partner was going to cooperate. Most of these students were
economics majors in their junior and senior years. Of the 31 students
returning our questionnaires, 18 (58 percent) reported that they would
defect, only 13 that they would cooperate. By contrast, just 34
percent (14 of 41) noneconomics Cornell undergraduates who were given
the same questionnaire reported that they would defect on a partner
they knew would cooperate (p<.05). For the same two groups of
subjects, almost all respondents (30 of 31 economics students and 36
of 41 noneconomics students) said they would defect if they knew their
partner would defect. From these responses, we conclude that while
expectations of partner performance do indeed play a strong role in
predicting behavior, defection rates would remain significantly higher
for economists than for noneconomists even if both groups held
identical expectations about partner performance.

II. Why Do Economists Behave Differently?

In the preceding sections we have seen evidence that economists
behave less cooperatively than noneconomists along a variety of
different dimensions. This difference in behavior might be
exclusively the result of training in economics. Alternatively, it
might exist simply because people who chose to major in economics were
different initially. Or it might be some combination of these two
effects. We now report evidence on whether training in economics
plays a causal role.

A. Comparing Upperclassmen and Underclassmen

If economics training plays a causal role in uncooperative
behavior, then we would expect defection rates in the prisoner's
dilemma experiments to rise with exposure to training in economics.
Again focusing on the no-promises subsample, the defection rates are
broken down by major and level of education in Figure 9. As shown,
the defection rate for economics majors is virtually the same for both
upperclassmen (juniors and seniors) and underclassmen (freshmen and
sophomores). By contrast, the defection rate for nonmajors is
approximately 33 percent higher for underclassmen than for
upperclassmen.

Figure 9. Defection Rates for Upper- and Underclassmen.

The pattern shown in Figure 9 continues to hold when we control for
the effects of other factors that influence defection rates. As the
regression equation summarized in Table 3 shows, the defection
probabilities do not differ significantly between upperclass economics
majors and underclass economics majors. For nonmajors, defection
probabilities are sharply lower than for majors in each category, and
fall by more than 0.16 with the transition to upperclass status.

Dependent variable:own response

R2 16.4%% R2(adjusted) 12.8%

s 0.4673 with 124 - 6 118 degrees of freedom

SourceSum of SquaresdfMean SquareF-ratio

Regression5.0359951.00724.61

Residual25.76241180.218325

VariableCoefficients.e.t-ratio

Constant0.6287340.1436 4.38

limited0.00----

intermediate-0.0950400.0876-1.09

sex0.2575380.08962.88

econ 1,20.00----

econ 3,4-0.0269360.1623 -0.166

nonecon 1,2-0.1510500.1426-1.06

nonecon 3,4-0.3132660.1427-2.20

Table 3. The Effect of Education Level on Defection
Rates.

Thus, for students in general there is a pronounced tendency toward
more cooperative behavior with movement toward graduation, a trend
that is conspicuously absent for economics majors. On the basis of
the available evidence, we are in no position to say whether the trend
for noneconomists reflects something about the content of noneconomics
courses. But regardless of the causes of this trend, the fact that it
is not present for economists is consistent with the hypothesis that
training in economics plays at least some causal role in the lower
observed cooperation rates of economists.

B. Honesty Surveys

In a further attempt to assess whether training in economics
inhibits cooperation in social dilemmas, we posed a pair of ethical
dilemmas to students in two introductory microeconomics courses at
Cornell University and to a control group of students in an
introductory astronomy course, also at Cornell. In one dilemma, the
owner of a small business is shipped ten microcomputers but is billed
for only nine and the question is whether the owner will inform the
computer company of the error. Subjects are first asked to estimate
the chances (0 - 100%) that the owner would point out the mistake, and
then, on the same response scale, to indicate how likely they
would be to point out the error if they were the owner. The second
dilemma concerns whether a lost envelope containing $100 and bearing
the owner's name and address is likely to be returned by the person
who finds it. Subjects are first asked to imagine that they have lost
the envelope and to estimate the likelihood that a stranger would
return it. They are then asked to assume that the roles are reversed
and to indicate the chances that they would return the money to a
stranger.

Students in each class completed the questionnaire on two
occasions, first during the initial week of class in September, and
then during the final week of class in December.

For each of the four questions, each student was coded as being
“more honest” if the probability checked for that question
rose between September and December; “less honest” if it
fell during that period; and “no change” if it remained
the same. Our hypothesis was that even a single semester of
introductory microeconomics would have a measurable effect both on
students' expectations of the level of self-interested behavior in
society and on their own propensities to behave self-interestedly.

The first introductory microeconomics instructor (instructor A)
whose students we surveyed is a mainstream economist with research
interests in industrial organization and game theory. In class
lectures, this instructor placed heavy emphasis on the prisoner's
dilemma and related illustrations of how survival imperatives often
militate against cooperation. The second microeconomics instructor
(instructor B) is a specialist in economic development in Maoist China
who did not emphasize such material to the same degree, but did assign
a mainstream introductory text. On the basis of these differences,
our expectation was that any observed effects of economics training
should be stronger in instructor A's class than in instructor B's.
The results for the three classes are summarized in Figures 10-12.

Introductory Microeconomics A (N
48)

Figure 10. Questionnaire Findings, Introductory Microeconomics
A.

Introductory Microeconomics B (N
115)

Figure 10. Questionnaire Findings, Introductory Microeconomics
B.

Introduction to Astronomy (N
30)

Figure 12. Questionnaire Findings: Introduction to Astronomy.

As Figures 10 and 11 indicate, a tendency toward more cynical
responses was observed in instructor A's introductory economics class
but not in instructor B's. In our control group of introductory
astronomy students (Figure 12), there was a weak tendency toward less
cynical expectations and behavior over the course of the semester.

It may seem natural to wonder whether the differences reflected in
Figures 10 and 11 might stem in part from the fact that students chose
their instructors rather than being randomly assigned. Perhaps the
ideological reputations of the two professors were known in advance to
many students, with the result that a disproportionate number of the
least cynical students chose to take instructor B's course. Two
observations, however, weigh heavily against this interpretation.
First, the average values of the initial responses to the four
questions were in fact virtually the same for both classes. And
second, note that Figures 10 and 11 record not the level of
cynicism but the change in that level between the beginning and
end of the course. Figure 11 thus tells us that even if the students
in Microeconomics A were more cynical to begin with, they became still
more so during the course of the semester. This finding is consistent
with the hypothesis that emphasis on the self-interest model tends to
inhibit cooperation.

Discussion

There have been several previous attempts to discover whether
economists behave in more self-interested ways than do noneconomists.
The Marwell and Ames finding of a greater tendency to free ride on the
part of economists is uncertain because their samples of economists
and noneconomists were different on so many dimensions other than
academic history and interests. The Carter and Irons findings on the
ultimatum bargaining game were subject to an alternative
interpretation based on the possibility that economics majors may have
held different views on how performance in the preliminary word game
affected entitlements in the ultimatum game.

We believe our prisoner's dilemma results constitute the clearest
demonstration to date of a large difference in the extent to which
economists and noneconomists behave self-interestedly. And our survey
of charitable giving lends additional support to the hypothesis that
economists are more likely than others to free ride.

But we also emphasize that both of these exercises produced
evidence that economists behave in traditionally communitarian ways
under at least some circumstances. For example, they reported
spending as much time as others in volunteer activities, and their
total gifts to charity were only slightly less than would have been
expected on the basis of their incomes. Finally, in the unlimited
version of our prisoner's dilemma experiments, where subjects were
allowed to promise to cooperate, economists were almost as likely to
cooperate as noneconomists were.

We also found evidence consistent with the view that the
differences in cooperativeness are caused in part by training in
economics. First, we saw that the gap in defection rates between
economics majors and nonmajors tends to widen as students move toward
graduation. Second, we saw that introductory microeconomics, at least
if taught in a certain way, seems to affect student attitudes toward
honesty.

Clearly, our evidence for the existence of a difference between the
behavior of economists and noneconomists is more compelling than our
evidence for the causal role of economics training in creating that
difference. But there is additional indirect evidence for such a
role. One of the clearest patterns to emerge in several decades of
experimental research on the prisoner's dilemma is that the behavior
of any given player is strongly influenced by that player's prediction
about what his partner will do. In experiments involving
noneconomists, people who expect their partners to cooperate usually
cooperate themselves, and those who expect their partners to defect
almost always defect. In our experiments, economists were 42 percent
more likely than noneconomists to predict that their partners would
defect. It would be remarkable indeed if none of this difference in
outlook were the result of repeated exposure to a behavioral model
whose unequivocal prediction is that people will defect whenever
self-interest dictates.

For the sake of discussion, suppose that exposure to the
self-interest model does, in fact, cause people to behave more
selfishly. Should this be a cause for concern? To the extent that
norms favoring cooperation help solve prisoner's dilemmas and other
market failures, one cost of a rise in selfish behavior is a fall in
the real value of economic output. Who bears this cost? By
conventional accounts, it is those who continue to behave
cooperatively, a troubling outcome on equity grounds. Several
researchers have recently suggested, however, that the ultimate
victims of noncooperative behavior may be the very people who practice
it. Suppose, for example, that some people always cooperate in
one-shot prisoner's dilemmas while others always follow the seemingly
dominant strategy of defecting. If people are free to interact with
others of their own choosing, and if there are cues that distinguish
cooperators from defectors, then cooperators will interact selectively
with one another and earn higher payoffs than defectors. Elsewhere we
have shown that even on the basis of brief encounters involving
strangers, experimental subjects are adept at predicting who will
cooperate and who will defect in prisoner's dilemma games. If people
are even better at predicting the behavior of people they know well,
it seems that the direct pursuit of material self-interest may indeed
often be self-defeating.

These observations do not challenge the obvious importance of
self-interest as a human motive. But they do suggest the need for a
richer model of 20human behavior, one that explicitly recognizes that
people who hold cooperative motives often come out ahead.

Appendix 2: Ethics Questionnaire

This questionnaire is part of an ongoing study of attitudes toward
ethical issues that arise in business and personal life. Please read
each question carefully and try to imagine yourself in the situation
it describes. Then check the most appropriate response category for
each question.

In an effort to increase productivity, the owner of a small
business has ordered ten personal computers for use by his staff.
When the UPS shipment arrives, he notices that the invoice from the
mail-order house bills for only nine PCs, even though all ten were
included with the shipment.

The owner has two options. (1) He can inform the mail-order house
of its error and ask to be billed for the correct amount; or (2) he
can pay the amount shown on the invoice and take no further
action.

If the owner pays the amount shown, the worst thing that can happen
is that the mail-order house may later discover its error and bill him
for the tenth computer. There is a high probability (0.99, say) that
the error will never be discovered.

What do you believe the chances are that the owner will inform the
mail-order house of its mistake and ask to be billed for the correct
amount? (Check one.)

_____________________________________________________________________

Question #2.

If YOU were the owner in the situation described in Question #1,
what are the chances you would inform the mail-order house of its
mistake and ask to be billed for the correct amount? (Check one.)

After attending a football game, you return home to discover that
you have lost an envelope from your jacket pocket. The envelope
contains $100 in cash and has your name and address written on the
outside. A stranger has found the envelope.

What would you say the chances are that this person will return
your $100 to you? (Check one.)

_____________________________________________________________________

Question #4.

If YOU found $100 in an envelope like the one described in Question
#3, what are the chances that you would return the stranger's cash?
(Check one.)

_____________________________________________________________________

For each of the following, please check the category that applies
to you:

Sex: male_____________female____________

Class: freshman________ sophomore__________

junior___________senior_____________other _____________

_____________________________________________________________________

There will be a followup to this questionnaire in December. In
order to match the followup questionnaire with this one, we need an
identifying code for each of you, one that preserves your anonymity
and that you will be able to recall easily in December. Past
experience has taught that a code with these properties can be made
from your middle name and your mother's maiden name.